Fed's Rate Cut: Misinterpreting Labor Market?
Update: 2025-12-11
Description
Federal Reserve Chair Jerome Powell suggests a weaker labor market, potentially leading to lower interest rates. However, economist Diane Swonk warns that the Fed might misinterpret the situation, risking its reputation for fighting inflation. Swonk argues that if job growth declines due to automation or immigration changes, cutting interest rates wont fix the core problem and could exacerbate inflation. The Fed recently cut rates for the third time in a row, but dissenting votes and differing opinions within the committee highlight the division. Swonk emphasizes the importance of accurately interpreting data and addressing structural issues, as the Feds credibility is crucial amid high government debt and potential inflationary pressures.
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